Here are 4 reasons I can’t be negative on this stock market
Stocks fell on Friday after a key inflation gauge came in much hotter than expected, and fears of AI disruption continued to rise. But CNBC’s Jim Cramer said there are four reasons why he remains bullish right now. “I am not going to be pessimistic when the 10-year [Treasury] is going down in yield,” he said Friday on “Squawk on the Street.” “I’m not going to be pessimistic when OpenAI, which at one point I thought couldn’t get the money, got the money. Not gonna be negative when I see what Dell did. And I’m not going to be negative because how much business does CoreWeave have?” Instead, Cramer said the latest wave of massive AI investment signals an expansion of the economy. AI startup OpenAI announced on Friday that it secured a combined $110 billion in new investments from Amazon ($50 billion), Nvidia ($30 billion), and Softbank ($30 billion), giving the ChatGPT maker a $730 billion valuation. Amazon’s portion is tied to a new multi-year partnership under which it will invest $15 billion upfront, with an additional $35 billion expected upon certain conditions being met. “This is great for the economy,” Jim Cramer said. “We’re in a new Industrial Revolution, and you’re not at the part where you’re winning yet. You’re in a part where you’re spending.” “We will regret the view” that AI is a negative because it’s taking jobs, he added. Despite Friday’s announcement, all three major indices were in the red, in part because core wholesale prices rose 0.8% in January, well above expectations. The Dow Jones Industrial Average dropped 1.1%, the S & P 500 fell 0.6%, while the Nasdaq Composite lost 0.9%. Investors remain uneasy that rapid AI adoption could displace workers across software, finance, and white-collar industries. That means job losses and slower wage growth that could ripple across the broader economy. There’s also a major concern that mega-cap companies, including Amazon , Meta , Microsoft , and Oracle , are spending too much on AI at the expense of profitability. However, for Cramer, this OpenAI deal reinforces that capital still flowing aggressively toward the buildout of AI infrastructure is a win for the economy and the stock market. New investment will lead to new jobs, new companies, and increased productivity, enabling companies to accelerate profits. In addition, Cramer said the yield on the 10-year Treasury, which fell on Friday, is generally supportive for stocks. That’s because lower yields reduce borrowing costs for companies and make future profits more valuable when discounted back into today’s dollars. Growth stocks and AI names in particular tend to benefit from falling rates. Dell ‘s strong fourth-quarter results and strong guidance on Thursday, driven by accelerating AI server revenue, are another reason to stay positive. Dell shares jumped more than 18% Friday. AI cloud provider CoreWeave also supports Cramer’s view that the economy is strong. CEO Michael Intrator said on “Squawk on the Street” Friday that “the demand for the infrastructure has been relentless for three years,” adding that clients are “increasing demand signals … broadening across the economy, they’re moving from just the AI labs and the clouds into the enterprise, into the sovereign. The business signals are overwhelming.” While Coreweave shares were down 11% Friday, Intrator emphasized the company is intentionally scaling aggressively during what he called a “once in a generation moment” for the AI buildout. He acknowledged the expansion will come at the expense of margins in the near term, but said the goal is to secure enough capacity to meet surging compute demands. At its core, that’s what OpenAI needs — more computing power, and fast. The explosive adoption of generative AI tools has strained available infrastructure. Training and running advanced AI models required enormous amounts of specialized chips, data center capacity, and energy. OpenAI doesn’t currently have enough computing capacity to fully support the growing demand for its models. The funding announced Friday should help OpenAI to lock in long-term computing access.
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